Tuesday, October 28, 2008

One of my long term themes is the Pooring of America - which is effectively a combination call on the dislocations via globalization and the implications of a world where capital is without boundary and median economic status of the "middle/working class" will move much closer together across countries (the middle classes in richer countries get poorer, and the poorer middle classes get richer) [Do the Bottom 80% of Americans Stand a Chance?] - along with the the US specific issues (massive debt both in government and individual households, lack of energy policy, lack of entitlement reform, exploding income inequality, concentration of wealth in fewer hands).

Well, it appears the Pooring of Japan might also be happening; my thesis on the globalization of wages to a more median level regardless of nation is starting to hit Japan as well. For those in low cost of living countries that's a good thing. (higher wages buy much in low cost countries) For those in countries where the cost of living is high - not so good. Fascinating stuff as it appears we are not the only nation where median wages are flat lining; and a growing disparity is rising between the well off and the not so well off as job security becomes a thing of a bygone era.

It is very interesting as this world seems to be developing into two modern models - that of the US/UK and apparently Japan where the worker is not protected in the name of "flexibility" and "innovation" versus that of more socialistic Western countries where a safety net for workers is immense and firing is a not so easy thing to do - and unions remain strong. Free marketeers will say the U.S.'s ability to be quite a bit more "cruel" to the working class will help it shed industries and retool for the future in rapid fashion - that's an open question. Yes there is innovation and ability for quick profit but to how many in the society? Is it being spread or just concentrated among very few while the masses of society subsidize this wealth creation? Further, if profits are reinvested increasingly more to capital & investors (share buybacks, dividends) instead of to the workers - what are the long term implications? A lot of interesting social debates can be interwoven into the economic policies - no clear black and white answers. But as I read the following story if you replaced the word Japan with America it would sound like a carbon copy in most places.

In one of the world's wealthiest nations, Junpei Murasawa is a poor man. He skips meals to make ends meet. A bachelor, he lives in a tiny apartment in Tokyo, sharing a kitchen, toilet and shower with nine neighbors. He doesn't have health insurance because he can't afford the premiums.

The 29-year-old laborer is one of a burgeoning class in Japan -- the working poor. The number of Japanese earning less than $19,610 a year surged 40 percent from 2002 to 2006, the latest data available, the government says. They now number more than 10 million.

In a country that boasts the world's longest-living population, where young women with Louis Vuitton bags crowd the sidewalks, Murasawa's is a voice of hopelessness and despair -- a voice increasingly heard in Japan. "Everyday I live in deep anxiety," said the soft-spoken temporary worker, currently making $882 a month by bagging purchases at a home improvement center. "When I think about my future, I get sleepless at night.

The growth of the working poor -- not seen in such numbers since Japan surged to wealth in the 1980s -- has been a shock to a country that once prided itself on being a bastion of economic equality.

"It is unprecedented to see such a widening income gap in Japan," said Yoshio Sasajima, economist at Meiji Gakuin University in Tokyo. "Our society is definitely becoming a class society."

The seeds of changes now wrenching Japanese society were planted in the burst of the so-called "bubble economy" in the early 1990s.

As the Tokyo stock market tumbled, evaporating vast stores of wealth, corporations restructured by laying off workers. In the 2000s, that was followed by a round of free market reforms that widened the disparity between haves and have-nots. (sounds vaguely familiar)

A key to the growth of the working poor has been the explosion in temporary employment agencies, which allow corporations to take on labor without having to pay benefits -- and then unload workers at will. (sounds vaguely familiar) "Instead of hiring costly, full-time employees, companies are bringing in cheaper, part-time workers as part of their cost-cutting efforts," said Yasuyuki Iida, an economist at Komazawa University in Tokyo.

The spike in the number of the working poor is already taking a toll on Japanese society. More people are putting off marriage because of tight finances, exacerbating a declining fertility rate. Part-time workers unable to afford rent sleep in 24-hour Internet cafes to escape the streets. Some have stopped going to the doctor because they can't afford it.

Despite his poverty, Murasawa doesn't qualify for government welfare payments -- he makes too much. To make ends meet, he's given up dining out, drinking, smoking, going to the movies or buying CDs, clothes and magazines. (sometimes you wonder if it's a race to the bottom - as employers are now nearly unfettered in ability to locate workers and facilities - I expect the median wage to continue to lag the real cost of life. But a free market supporter could argue - it's still a better life than in sub Saharan Africa... but better than your parent's generation? Maybe not so much anymore) "I've stopped being hopeful for the future. I've already given up getting married because I have no money to do so. Getting married is like a fairytale to me. It is utterly unrealistic," he said.

That hopelessness is spreading to pop culture. The surprise runaway best-selling book of the year, for instance, is a Marxist novel written in 1929. "The Crab Factory Ship," by communist Takiji Kobayashi, chronicles hellish labor conditions of ship workers under a sadistic captain. "The book must have struck a chord with the young working poor who feel that their lives are not getting any better no matter how hard they work," said Tsutomu Sasaki, a senior manager of Shinchosha. He estimated 30 percent of the book's readers are men in their 20s.

"Even though I have a good job now, I'm always worried that I could slip back to poverty anytime," Yamaguchi said. "There is no job security in Japan anymore."

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